Australia Puts Huge Chinese-Backed Coal Mine Project on Hold

Plans for a massive coal mine in New South Wales, Australia, which is being developed by Chinese coal mining giant Shenhua Group, were thrown into doubt as the federal environmental minister opted to delay a decision on its final approval.

The Watermark mine, which could cost $1.2 billion and produce more than 250 million metric tons of coal over its 30-year lifetime, is being developed to feed China’s demand for imported coal. The open-cut project has been hugely controversial in NSW because it would sit on a ridge above some of the richest agricultural lands in Australia. Farmers and environmentalists have been fighting the project because of fears of damage to the local watershed.

The Liverpool Plains region of NSW is reportedly 40% more productive than average for farming land in Australia. The NSW government had approved the project in February despite the fierce opposition.

The mine has been in development since 2008. Due for final approval by March 13, it has now been placed on hold by environmental minister Greg Hunt under so-called “water trigger” legislation that requires large mining projects to be referred to an independent scientific committee for a review of their environmental impact.

Some observers suspect the move may be politically motivated, as it will delay a decision on the mine past the March 28 state elections in NSW. The center-right Australian Liberal Party, which controls the federal and NSW governments, has been under increasing fire for its environmental policies. It was ousted from control of the Queensland state government at the end of January in a close election in which environmental concerns were a key issue.

The coal from Watermark would be exported to China, mostly for power plant use. Though China is the world’s largest coal producer, its needs have grown well beyond its domestic production, and it has looked overseas for new mines to develop, especially in Australia, which has mostly welcomed the investments. Still, concerns about pollution and climate change have placed pressure on the nation to cut growth in its coal consumption. The nation’s coal imports fell 39 million tons in 2014.

—Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine).